OK, trying to figure out what to do with holdings in a taxable account. Before learning about BH, I had been putting money into a taxable account to buy individual stocks. Still have around $7-8k in holdings. Thinking of selling for TLH and using those funds to put elsewhere. Here are the areas I was thinking of putting the $s.

Holding for next months bills to be able to add money to employer contribution to solo 401k. Maxing out the employee side at 18.5k already.

Paying off the rest of CC that has a little less than $7k at 11.25%. Paid off $4500 this month. Can pay at least $2.5k each month and not adding any more to the balance.
*****PAYING THIS OFF THIS MONTH WITH PROCEEDS FROM TAXABLE ACCOUNT****

*******(See last post for a look at what my plan is. This is where I need advice)*******

Or funding EF that only has $2.5k. Used most reserve funds to pay for family cruise coming up in April. Trip has been paid for in full. We were putting all extra money to pay off CC debt. Was $60k + about a year ago. (Wife had to have big vacations each year, sometimes 2). Will only go if we can afford it from now on. See is on board with it. Budgeting to keep expenses down, but we live in an area that has an extremely high cost of living.

More info Maxing out HSA for 2018. Income is variable ranging from $28-34k month. Taxes (fed & state) are $9800 month. Health ins $1969 month. Mortgage $3850 month 29 years left at fixed 4.5. Other monthly bills expenses total around $7800 month. A good chunk will go away this summer (car payment, 401k loan, etc paid off). Total retirement in 401ks = currently at $370k. Self managed, all indexed funds, basically a 3 fund portfolio (3 funds for full international coverage with Schwab for a total of 5 funds). Age 47.

You seem to have an affinity for accumulating debt. Although your income is quite large, for some reason it seems you’ve got debt coming from all angles. My suggestion is simple: the focus of your monetary strategy should be on getting out of debt. So yes, sell the taxable funds and pay off the credit card debt at 11.25%.

First I'd say you need minimum 3-6 months expenses saved in an emergency fund and your wife's buy-in that money won't be spent for vacations, etc. in the future. With only $2500 in your emergency fund you are low and are set up to take on more credit card debt if a large unplanned expense hits. It's good that you are saving in the Solo 401K but I'd pay off the high interest debt before further investing.

Yes, I know. We just had some bad timing on housing. She wanted her dream home which was a bit too much. We built in 2008 and then couldn't sell our other house. Stuck with for 6 years before we could find a buyer. Had it rented out, but that didn't cover the mortgage. Also had a ton of medical bills that we finished paying off last year. Lots of set backs while putting vacations on CC. Wanted to take family vacations while the kids were young. We are on track now, but it is a bit overwhelming as to what to do 1st. We can save a ton on taxes by funding the 401k and we are losing about $8-9k in itemized deductions, so could make up those loses with more contributions. But, yes, getting rid of that CC would then free up more for contributions. The sale of stocks for a loss will also help with more deductions. So will do that. Sell and pay off the CC. Will have another $1200 free up when both cars are paid off in April. 401k loan will be paid off in July freeing up another $1k. Think I will work on EF and paying off heloc. Then student loan and get rid of the Discover card debt. Will aim for $100k in EF. Have an online savings account that pays 1.45%.

You two didn't just have some misfortunes. You made some very bad financial decisions. Large ones. To further the mess, you didn't have an adequate emergency fund when the true misfortunes happened. The truth is you just had bad financial habits. It appears you are trying to change that.

I think you've realized some of that, but not really accepted responsibility for your part in all this (both of you). There's plenty of money coming in so where does the fault lie?

Until you (both of you) see that and accept it, you are likely to repeat the same mistakes in the future. So please work on the "taking responsibility" aspect of your actions if you actually want to make progress.

You've had a lot of activity on the board recently and I think you are truly and honestly trying to get headed in the right direction and I wish you the best in that endeavor.

No, very open to criticism. We need any advice we can get. And I do agree we went overboard on the spending. Delayed gratification from school and not getting real jobs until in 30s. Pretty much what the White Coat Investor preaches. We are a prime example of the kinds of mistakes that can be made. A lot of the issues are that my wife is homesick and it cost a bundle for a family of 4 to travel. Flights out of our closest airport are usually $500 or more per ticket. We often drive 6 hours to the biggest airport to save around $1k on airfare, but that is a lot of trouble. "Home" is 2k miles away, so driving is usually out of the question. Unfortunately, most of our relatives are unable to travel anymore and they can't visit us. A trip back home costs a minimum of $3k and we usually try to get a few days at a beach. Doing this 1-2 times a year gets costly. I've convinced my wife to follow a budget and she is aware that this is the only way to get out of the hole we dug. Unfortunately, she loves shopping. It has been very hard for her. The amount of progress we have made helps though. She can see the results. Also aware of the amount we need to invest/save to be able to retire. We are starting with a large deficit and have made a lot of bad choices, but I think we are on the correct track to at least come close to meeting our goals. I value the input from these forums. Lots of smart people on here with lots of helpful advice. I appreciate everyone's help

ChinchillaWhiplash wrote: ↑A lot of the issues are that my wife is homesick and it cost a bundle for a family of 4 to travel. Flights out of our closest airport are usually $500 or more per ticket. We often drive 6 hours to the biggest airport to save around $1k on airfare, but that is a lot of trouble. "Home" is 2k miles away, so driving is usually out of the question. Unfortunately, most of our relatives are unable to travel anymore and they can't visit us. A trip back home costs a minimum of $3k and we usually try to get a few days at a beach. Doing this 1-2 times a year gets costly. I've convinced my wife to follow a budget and she is aware that this is the only way to get out of the hole we dug.

A homesick spouse is difficult, makes it hard to have a home of warmth and tranquility, can be difficult for the kids. But actually, your trips back home to visit elderly relatives may be the most wonderful memories of this period in your family's life. How many more years do your children have to visit their elderly relatives? So I would look forward to these visits. Just have to plan for them with strict accounting so they don't become a source of financial problems and negativity.

Unfortunately, she loves shopping. It has been very hard for her. The amount of progress we have made helps though. She can see the results. Also aware of the amount we need to invest/save to be able to retire.

If not, tell her to get a job and that’s her spending money. See how much she really “loves” shopping.

She actually is the primary bread winner as a physician. She grew up poor in rural NC. She didn't get to shop much when she was young. Having a high income opened a Pandora's box. I have shown her the numbers and she would like to retire at some point. It was a rude awakening.

OK, sell orders set. Will pay off the CC this month. Will be accumulating around $26k in EF, maxing out employee contribution in 401k at $18.5k, maxing out HSA at $6900 all this year. Once 401k loan is paid off, will used that to start knocking down the heloc. Plan on saving $36k in 2019. At that point, will back off on EF to aggressively pay down the heloc. Then the student loan. Will look into refi on the student loan if I can get at least a 1% reduction in interest. Hope to make full employer contribution to 401k also. Does this sound like logical steps to stay on track? Budgeting will continue to make sure we do not spend more than is coming in. Hope to max out all tax deferred investments at some point. Then add to taxable. The only thing I'm leaving in there now is a small position in VBR. Just going to leave that and ignore for 10 years.

I recommend The Millionaire Next Door. It is 20 years old but the principles still apply and might help you and your wife build a healthier relationship with money. Just because you're a doctor doesn't mean you can afford everything

Since she's the main breadwinner, does she have good insurance (disability, life, etc.)?

I recommend The Millionaire Next Door. It is 20 years old but the principles still apply and might help you and your wife build a healthier relationship with money. Just because you're a doctor doesn't mean you can afford everything

Since she's the main breadwinner, does she have good insurance (disability, life, etc.)?

Will see if I can find it at the library. Think we have decent coverage. I know the disability is good. Probably could up the term life coverage some, but it should be OK.

Once EF and V are fully funded, will put those $s towards Employer solo 401k contribution. Saving 28.63% on each dollar in taxes by funding this. Potential contribution is around $30k depending on income for the year. This is in addition to the $18.5k from employee payroll deduction.

****Would it be better to fund this more and be less aggressive on the loans? There is a big tax savings over the interest payment)****

OR once EF and Vacation accounts are fully funded will put everything towards HELOC payoff $43k Should be paid in full by Dec 2019.
Then the money will go towards student loan $63k with expected payoff Feb 2022.

Which should I work on 1st? The loans or fully funding 401k? Heloc @ 5.25% variable. SL @ 4.85% fixed. 401k tax savings @ 28.63% according to my CPA for 2017 (guessing 2018 will be a similar deduction?). Or should I split it between loans and 401k? Which option is best given the info I have provided? Any other info needed?

I'm leaning towards paying $2k month on heloc (then $2500 to SL) and $1500 month towards 401k. Starting this Nov 2018. Will result in extending heloc payoff until about 2 years from now, but could save around $5153.40 in a year on taxes. Does this sound about right? Will be putting 401k fund into 1.45% savings until contribution limit calculated for income %. Then make the employer contribution as a lump sum. No danger of over contributing this way.

What do you mean by "fully funding the 401k? Do you just mean the $18.5k? Or are you also including the employer portion? Is there only 1 401k or do each of you have one?

I can't help much with what your priorities should be, but I'd suggest you concentrate on the $18.5 and maybe not worry about the other $30k till you are in better shape.

Something still worries me. You said income was $28k to $34k a month. And expenses are $10k a month. I know you pay a lot in taxes and are putting money into 401k, but isn't there some money not accounted for? Or maybe I'm overlooking something.

No, very open to criticism. We need any advice we can get. And I do agree we went overboard on the spending. Delayed gratification from school and not getting real jobs until in 30s. Pretty much what the White Coat Investor preaches. We are a prime example of the kinds of mistakes that can be made. A lot of the issues are that my wife is homesick and it cost a bundle for a family of 4 to travel. Flights out of our closest airport are usually $500 or more per ticket. We often drive 6 hours to the biggest airport to save around $1k on airfare, but that is a lot of trouble. "Home" is 2k miles away, so driving is usually out of the question. Unfortunately, most of our relatives are unable to travel anymore and they can't visit us. A trip back home costs a minimum of $3k and we usually try to get a few days at a beach. Doing this 1-2 times a year gets costly. I've convinced my wife to follow a budget and she is aware that this is the only way to get out of the hole we dug. Unfortunately, she loves shopping. It has been very hard for her. The amount of progress we have made helps though. She can see the results. Also aware of the amount we need to invest/save to be able to retire. We are starting with a large deficit and have made a lot of bad choices, but I think we are on the correct track to at least come close to meeting our goals. I value the input from these forums. Lots of smart people on here with lots of helpful advice. I appreciate everyone's help

Look at credit card signup bonuses to cut the flight/hotel travel expenses. Since I've done that, I always find a way to pay for flights/hotels with some kind of points instead of cash. UR and SPG can go a long way. I could even help you over PM if you want to go further into what kinds of flights/hotels you are doing if interested. Reddit.com/r/churning has some good advice.
However, its best to clear the existing debt before getting too involved there.

No, very open to criticism. We need any advice we can get. And I do agree we went overboard on the spending. Delayed gratification from school and not getting real jobs until in 30s. Pretty much what the White Coat Investor preaches. We are a prime example of the kinds of mistakes that can be made. A lot of the issues are that my wife is homesick and it cost a bundle for a family of 4 to travel. Flights out of our closest airport are usually $500 or more per ticket. We often drive 6 hours to the biggest airport to save around $1k on airfare, but that is a lot of trouble. "Home" is 2k miles away, so driving is usually out of the question. Unfortunately, most of our relatives are unable to travel anymore and they can't visit us. A trip back home costs a minimum of $3k and we usually try to get a few days at a beach. Doing this 1-2 times a year gets costly. I've convinced my wife to follow a budget and she is aware that this is the only way to get out of the hole we dug. Unfortunately, she loves shopping. It has been very hard for her. The amount of progress we have made helps though. She can see the results. Also aware of the amount we need to invest/save to be able to retire. We are starting with a large deficit and have made a lot of bad choices, but I think we are on the correct track to at least come close to meeting our goals. I value the input from these forums. Lots of smart people on here with lots of helpful advice. I appreciate everyone's help

Look at credit card signup bonuses to cut the flight/hotel travel expenses. Since I've done that, I always find a way to pay for flights/hotels with some kind of points instead of cash. UR and SPG can go a long way. I could even help you over PM if you want to go further into what kinds of flights/hotels you are doing if interested. Reddit.com/r/churning has some good advice.
However, its best to clear the existing debt before getting too involved there.

I was thinking of the same thing. Once I pay this CC off was going to use it for normal purchases to rack up points and pay it off each month. I have used those points in the past to get tickets as low as $90 per person. Our next trip in April tickets were $608 per person! Wish I had points now, but stopped putting anything on the cards and used the points to pay down the balance. I just have to make sure we stay within the monthly allotted budget.

Big salaries don't guarantee you of anything except big spending. Less is more with life and investing.

I agree and we are thinking about it. Big house = big expenses/utilities. Housing market is going up where we are finally. We are thinking about possibly moving once the kids are out of school. (12 & 17). SE is on the radar.

What do you mean by "fully funding the 401k? Do you just mean the $18.5k? Or are you also including the employer portion? Is there only 1 401k or do each of you have one?

I can't help much with what your priorities should be, but I'd suggest you concentrate on the $18.5 and maybe not worry about the other $30k till you are in better shape.

Something still worries me. You said income was $28k to $34k a month. And expenses are $10k a month. I know you pay a lot in taxes and are putting money into 401k, but isn't there some money not accounted for? Or maybe I'm overlooking something.

Fully fund Employer. Already maxing out employee portion. I have a 401k, but not able to contribute as I am unemployed at the moment. The $10k is the minimum to get by in an emergency. Excluding taxes and a lot of current payments that will be gone in the next few months. Also not counting monthly savings, HSA, etc.

Once EF and V are fully funded, will put those $s towards Employer solo 401k contribution. Saving 28.63% on each dollar in taxes by funding this. Potential contribution is around $30k depending on income for the year. This is in addition to the $18.5k from employee payroll deduction.

****Would it be better to fund this more and be less aggressive on the loans? There is a big tax savings over the interest payment)****

OR once EF and Vacation accounts are fully funded will put everything towards HELOC payoff $43k Should be paid in full by Dec 2019.
Then the money will go towards student loan $63k with expected payoff Feb 2022.

Which should I work on 1st? The loans or fully funding 401k? Heloc @ 5.25% variable. SL @ 4.85% fixed. 401k tax savings @ 28.63% according to my CPA for 2017 (guessing 2018 will be a similar deduction?). Or should I split it between loans and 401k? Which option is best given the info I have provided? Any other info needed?

I'm leaning towards paying $2k month on heloc (then $2500 to SL) and $1500 month towards 401k. Starting this Nov 2018. Will result in extending heloc payoff until about 2 years from now, but could save around $5153.40 in a year on taxes. Does this sound about right? Will be putting 401k fund into 1.45% savings until contribution limit calculated for income %. Then make the employer contribution as a lump sum. No danger of over contributing this way.

Once EF and V are fully funded, will put those $s towards Employer solo 401k contribution. Saving 28.63% on each dollar in taxes by funding this. Potential contribution is around $30k depending on income for the year. This is in addition to the $18.5k from employee payroll deduction.

****Would it be better to fund this more and be less aggressive on the loans? There is a big tax savings over the interest payment)****

OR once EF and Vacation accounts are fully funded will put everything towards HELOC payoff $43k Should be paid in full by Dec 2019.
Then the money will go towards student loan $63k with expected payoff Feb 2022.

Which should I work on 1st? The loans or fully funding 401k? Heloc @ 5.25% variable. SL @ 4.85% fixed. 401k tax savings @ 28.63% according to my CPA for 2017 (guessing 2018 will be a similar deduction?). Or should I split it between loans and 401k? Which option is best given the info I have provided? Any other info needed?

I'm leaning towards paying $2k month on heloc (then $2500 to SL) and $1500 month towards 401k. Starting this Nov 2018. Will result in extending heloc payoff until about 2 years from now, but could save around $5153.40 in a year on taxes. Does this sound about right? Will be putting 401k fund into 1.45% savings until contribution limit calculated for income %. Then make the employer contribution as a lump sum. No danger of over contributing this way.

Any specific advice on this?

I second the recommendation to read and follow Dave Ramsey's budgeting and baby steps until you are out of debt. You have too many things on the list. Focus on one at a time! Otherwise, you'll do a little on many things, play mental accounting games, not make visible progress, and get discouraged.

don't try to play the credit card rewards game - likely to become a crutch or an excuse to spend to get points.

Makes sense. Have a few things that are different than that scenario. Don't have an employer match with the solo 401k. I don't quite agree with where HSA comes in. Want to put this up higher because of the tax break we will get and want to be able to cover our deductable and dental expenses. It is like an EF for unexpected medical events, but is tax deferred. Having hit the $5k deductible 6 years in a row with 3 different family members having hospital stays or surgery, I think it is a high priority. Basically had to have plan in place with the hospital before and made contribution to HSA in the amount of monthly bill, then used the HSA to pay the bill. Never had much surplus in the account. Had 2 kids in braces and our insurance does not cover any dental, so this added thousands to the insurance deductibles. Unfortunately, never had enough medical expenses to be able to deduct them on taxes due to high income.

But, looks like most recommend build EF, getting rid of Heloc, Student Loan, then max out 401k. The high interest CC will be paid off as soon as funds clear from stock sale. Had more than enough to cover it. Next to be knocked out are Jeep @ 0% with 3 x $865 payments left, Subaru @ 1.9% w/4 x $360 payments left, PayPal balance @ 0% w/4 x $208 payments left, and finally a 401k loan due 7/31/18. Paying $1200 month. After this, a lot of cash freed up to fund or pay down HELOC, Student Loan, and the final CC @ 4.5% for life of balance which has $7200 left on it. Not prioritizing the final card as it has the lowest interest rate of the remaining debt.

I do need to fund the vacation/general fund too. If my wife can't get a vacation each year, it will get ugly and she WILL use the CC to get one. We didn't take any vacations for a decade before we moved out west away from family. It is a top need/want for her. If I can build up a fund for this, problem solved. So, I rank this right up with the EF if not even on top. I could always Use V fund if it was an emergency. So, maybe make EF 2nd on the list and build it up a little slower.

Employee payroll 401k deductions being made to max out contributions at $18,500. Combined with HSA will result in a $7272 tax reduction. This money saved in taxes can be used to pay off the debt faster by leaving more money from reduced monthly taxes being taken out, correct? I calculated that interest from both HELOC and SL combined for the year is around $4350. Can someone explain why it is better to pay off the loans quicker than get more tax reduction? I just don't get it. It still seems like it is better to fully fund 401k to get the tax benefits and increase retirement savings. If we max out the employer contribution at around $30k, we can get $8589 more in tax savings, while also getting closer to retirement savings goals. It would up our retirement funding to 15%+ of gross income. Currently we are just saving about 7%. At this stage, we need to be putting in around 30% to have any chance of retirement at a decent age. Please shed some light on my thinking.

Employee payroll 401k deductions being made to max out contributions at $18,500. Combined with HSA will result in a $7272 tax reduction. This money saved in taxes can be used to pay off the debt faster by leaving more money from reduced monthly taxes being taken out, correct? I calculated that interest from both HELOC and SL combined for the year is around $4350. Can someone explain why it is better to pay off the loans quicker than get more tax reduction? I just don't get it. It still seems like it is better to fully fund 401k to get the tax benefits and increase retirement savings. If we max out the employer contribution at around $30k, we can get $8589 more in tax savings, while also getting closer to retirement savings goals. It would up our retirement funding to 15%+ of gross income. Currently we are just saving about 7%. At this stage, we need to be putting in around 30% to have any chance of retirement at a decent age. Please shed some light on my thinking.

CAN SOMEONE EXPLAIN WHY MY THOUGHTS ON THIS ARE INCORRECT?
I don't like carrying debt either, but... I'm trying to do what gets us ahead the most. Mathematically, funding the 401k makes the most sense. Unless I'm missing something

Employee payroll 401k deductions being made to max out contributions at $18,500. Combined with HSA will result in a $7272 tax reduction. This money saved in taxes can be used to pay off the debt faster by leaving more money from reduced monthly taxes being taken out, correct? I calculated that interest from both HELOC and SL combined for the year is around $4350. Can someone explain why it is better to pay off the loans quicker than get more tax reduction? I just don't get it. It still seems like it is better to fully fund 401k to get the tax benefits and increase retirement savings. If we max out the employer contribution at around $30k, we can get $8589 more in tax savings, while also getting closer to retirement savings goals. It would up our retirement funding to 15%+ of gross income. Currently we are just saving about 7%. At this stage, we need to be putting in around 30% to have any chance of retirement at a decent age. Please shed some light on my thinking.

CAN SOMEONE EXPLAIN WHY MY THOUGHTS ON THIS ARE INCORRECT?
I don't like carrying debt either, but... I'm trying to do what gets us ahead the most. Mathematically, funding the 401k makes the most sense. Unless I'm missing something

A few points. First, you are making the decision to borrow vs invest. To put it another way you are borrowing money to invest by not paying off the debt. Maybe you are ok with that but you have to realize that is the decision you are faced with. If you are ok to borrow to invest, why not go out and get a brokerage loan and invest even more? Related to this laying off debt is a guaranteed return of the debt interest rate. Compare it to bond rates and see if it makes sense to borrow vs invest.

Another point is that debt means risk - it is an obligation. Paying off debt reduces your expense and obligation level and thus reduces your overall risk.

The other point, which is related to the Dave Ramsey book I referenced is that personal finance is 80% behavior, 20% math. If you put a little pain in your lives and get intense about getting rid of the debt it changes the way you behave - it causes you to get more serious about your budget and will likely have a much bigger impact than any tax savings. Delaying contributing to 401k is painful. If it is painful enough you will try even harder to lay off the debt faster so you can get back to maxing out the 401k.

What do you mean by "fully funding the 401k? Do you just mean the $18.5k? Or are you also including the employer portion? Is there only 1 401k or do each of you have one?

I can't help much with what your priorities should be, but I'd suggest you concentrate on the $18.5 and maybe not worry about the other $30k till you are in better shape.

Something still worries me. You said income was $28k to $34k a month. And expenses are $10k a month. I know you pay a lot in taxes and are putting money into 401k, but isn't there some money not accounted for? Or maybe I'm overlooking something.

Fully fund Employer. Already maxing out employee portion. I have a 401k, but not able to contribute as I am unemployed at the moment. The $10k is the minimum to get by in an emergency. Excluding taxes and a lot of current payments that will be gone in the next few months. Also not counting monthly savings, HSA, etc.

I was thinking of the same thing. Once I pay this CC off was going to use it for normal purchases to rack up points and pay it off each month. I have used those points in the past to get tickets as low as $90 per person. Our next trip in April tickets were $608 per person! Wish I had points now, but stopped putting anything on the cards and used the points to pay down the balance. I just have to make sure we stay within the monthly allotted budget.

As you're paying down the debt(s), most of the APRs for the debt are higher than what investment gains could earn. 11.24% is paid after paying taxes. Last year's gains were an anomaly.

Sometimes another credit card can be useful to obtain a zero percent introductory balance transfer offer. Once a statement on the first card shows a zero (or negative) balance, the first card can be used for purchases that will be paid in full each month moving forward.

Dave Ramsey uses cash for everything; I temper that philosophy to say that if you know what you're putting on the card will be paid when it comes due, then why not use the point-earning card?

OP, I am fairly new to investing, and would not offer advice on that, but your problem is one of personal finance. You and your wife have had horrible spending habits. I think, based on your early posts, that your wife has had "docitis" meaning she has been in a mode of "I grew up poor and struggled to become a doctor and now that I am, and am making good money, I should be able to spend it like crazy to have the things I think I want, and NOW..". Now that you have come to some sort of realization about the hole you are in, I Think you are trying to do too much at once, and your divided attention is liable to cause you to fail. Use the power of concentration to systematically get where you need to be. Focus on eliminating your debt first. Then use that beautiful income that is no longer tied up in all those terrible monthly payments to start doing the things you need to for your future, ie: retirement investing. Your wife is going to have to realize that you all are in a deep hole, and she is going to have to forgo some of the things that she thinks makes her happy to get out of that hole (read vacations to visit the old homestead and beaches). The good news is you have a big shovel to fill in that hole with (great income). Be intentional with ypur money. You need Dave Ramsey in your life for sure!

Employee payroll 401k deductions being made to max out contributions at $18,500. Combined with HSA will result in a $7272 tax reduction. This money saved in taxes can be used to pay off the debt faster by leaving more money from reduced monthly taxes being taken out, correct? I calculated that interest from both HELOC and SL combined for the year is around $4350. Can someone explain why it is better to pay off the loans quicker than get more tax reduction? I just don't get it. It still seems like it is better to fully fund 401k to get the tax benefits and increase retirement savings. If we max out the employer contribution at around $30k, we can get $8589 more in tax savings, while also getting closer to retirement savings goals. It would up our retirement funding to 15%+ of gross income. Currently we are just saving about 7%. At this stage, we need to be putting in around 30% to have any chance of retirement at a decent age. Please shed some light on my thinking.

CAN SOMEONE EXPLAIN WHY MY THOUGHTS ON THIS ARE INCORRECT?
I don't like carrying debt either, but... I'm trying to do what gets us ahead the most. Mathematically, funding the 401k makes the most sense. Unless I'm missing something

As I said on the previous thread, and other posters have said here, the best plan is the one that you and your wife are going to be able to focus on and execute. This plan has too much complexity and it will be hard to see/feel progress and keep going. Your are right that if the plan is executed perfectly, you end up slightly ahead by getting the tax deduction before paying lower interest debt...BUT if you had been good at optimizing your financial math, you wouldn't have 11% credit card debt while sitting on a taxable account.

CAN SOMEONE EXPLAIN WHY MY THOUGHTS ON THIS ARE INCORRECT?
I don't like carrying debt either, but... I'm trying to do what gets us ahead the most. Mathematically, funding the 401k makes the most sense. Unless I'm missing something

Because the money you pay on debt interest is gone forever, and your tax savings on 401(k) contributions are only temporary. You'll pay those taxes when you're retired and drawing it down (when it's almost certain you won't have as much margin for error to pay them as you do now).

So this is just another shell game you're playing. Essentially, as pointed out, it's like borrowing money to invest in the market. More instant gratification that pushes reckoning further into the future.

Employee payroll 401k deductions being made to max out contributions
at $18,500.
Combined with HSA will result in a $7272 tax reduction. This money
saved in taxes can be used to pay off the debt faster by leaving more
money from reduced monthly taxes being taken out, correct?

I'm confused as to why you think this is faster. Let's take your 43K heloc
as an example.

43,000/18,500 = 2.33 years to pay off this loan
43,000/7272 = 5.91 years to pay off this loan

and this is oversimplified because interest is surely accruing on
the HELOC in the extra years you are holding this loan.

What's faster about that?

You may have other reasons to prioritize 401K and HSA savings, but
I think you are deceiving yourself by thinking you are paying debt
faster. You're not. You're carrying debt for the sake of your
401K and HSA contribution. Is this the right thing to do? Some thoughts ...

One question to investigate is whether your debt is increasing, or stable.
If it is increasing (more debt, interest accruing), I would say you should
pay enough towards loans to stabilize the debts, even if you save less. The
401K contribution is not all or nothing, you know.

One other thing to consider is that student loan debt cannot be discharged
in bankruptcy. One way or another, you'll carry the debt until you pay it
off. Even your social security can be garnished to pay student loan debt. That's
why you'll see much advice to pay off SL debt asap. You happen to have bigger
fish to fry at the moment.

Good luck!

He that loveth silver shall not be satisfied with silver; nor he that loveth abundance with increase: this is also vanity. Ecclesiastes 1:8

Thanks for all the posts. Making sense to me now. I can reduce the payroll deduction save EF quicker and pay on loans. I am unemployed since I was phased out of a telecommuting job. I lose 50% of my income to taxes when it is all said and done. Wife earned way more too. With her schedule and having kids someone needed to be around for them. Get rid of debt, that will be priority. Luckily no new debt. Our cars are 2015, 2013 and should last for several more years. I recently bought a dish washer, washer, dryer since our old ones died. There isn't much in the way of knocking all the debt out quickly other than my wife's want of going on vacations. We have a big one coming up (already paid for), so I hope that gets it out of her system for awhile. Wish me luck. Will do my best to knock it out and never get it back. Thanks everybody!

I can't. I think you have a good point and a good question, but my instincts are that it is better to pay the higher cost loans faster.

It all seems to boil down to just the last $30k. Should it go into the employer's contribution to 401k or into debt? You think that because of the tax savings of putting $30k into the 401k, it is better to do that.

One thing to consider is that paying off the loans is a guaranteed return on your money. Investing it brings you no guaranteed return - in fact, you may even lose money on your investments. This does not overcome your "tax savings" argument, but it may be something you are overlooking.

You seem a little tied up in knots over this. I would not let this decision overwhelm you. It's not that important. In the long run, either plan is moving you toward your best goal of getting out of debt and saving for retirement. In the long run, the "better" plan may save some money, but the savings may not be a significant amount of money compared to an income of up to $34k a month.

As others have mentioned, it is important to make a plan that feels right to you two. That is more important than whether one plan gets you there a month faster than the other plan. Or $50k richer than than the other plan. The best plan is one you two can and will follow and the plan that gives you a sense of fulfillment in executing it.

I'd suggest that if you and your wife have different ideas on what to do with this $30k, go with her wishes since she is the one who needs more "buy in" into to this plan. It is more important that she be satisfied with your solution than you because you got to the realization that change had to happen first and you are the one who is "engineering" this thing. Make sure she has as much say in the solution as you do. Maybe more.

I'll repeat myself. Any plan that moves you toward your goal is a good one. Do not waste your energy in trying to find "the best" way. Investing is full of decisions based on things that you cannot predict and things you have no control over. Find a plan that is "good enough" and go forward with it without regret.

I don't think this Wiki page has been mentioned. It might have something of interest to you. Or it may not help at all.

I am unemployed since I was phased out of a telecommuting job. I lose 50% of my income to taxes when it is all said and done. Wife earned way more too. With her schedule and having kids someone needed to be around for them.

If you're newly unemployed, make sure you make lifestyle adjustments to reflect that. For example, while you both were working you might have purchased a lot of prepared meals or ate out. Now that you're home, you can cook everything from scratch, which is both healthier and saves a LOT of money. Similarly you can now mow the lawn instead of paying someone to do it. Shovel the snow, trim the bushes, fix things that break, clean the house instead of hiring housekeepers. Shop around when things need professional fixing. For example, before you might have taken the car to be fixed at the most convenient place. Now you have time to shop around and find the best deal. Perhaps that auto shop a few miles further off the commute does better work for 25% less? You can also shop around for groceries, finding the places with sale prices. Go through your 'stuff' and find things that you no longer need/want. Sell what you can, donate the rest. Clears out space, and earns money either through sale price or donation tax credit.

Go through your bills. Are there gym memberships, magazine subscriptions, entertainment subscriptions, or similarly recurring charges that you signed up for at some point and haven't used? Easy to forget about them when you're busy, but they add up. Similarly, take the time to look through all the new deals on cell phone plans. Perhaps the plan you signed up for in a hurry a few years ago is much more expensive than a new plan on a better network.

I am simply a novice investor, so won't really comment on your overall plan. However, from a behavioral point of view I would like to point out that you are still prioritizing vacations over tackling debt or even building an emergency fun. To me, that seems to show that you (and / or your spouse) have not committed to making the lifestyle change needed to clean things up.

I'm not a huge fan of Dave Ramsey, but his advice on getting out of debt seems to be perfect for your situation. As others have mentioned, pick up his book today and read it today - it is a short read.

Employee payroll 401k deductions being made to max out contributions at $18,500. Combined with HSA will result in a $7272 tax reduction. This money saved in taxes can be used to pay off the debt faster by leaving more money from reduced monthly taxes being taken out, correct? I calculated that interest from both HELOC and SL combined for the year is around $4350. Can someone explain why it is better to pay off the loans quicker than get more tax reduction? I just don't get it. It still seems like it is better to fully fund 401k to get the tax benefits and increase retirement savings. If we max out the employer contribution at around $30k, we can get $8589 more in tax savings, while also getting closer to retirement savings goals. It would up our retirement funding to 15%+ of gross income. Currently we are just saving about 7%. At this stage, we need to be putting in around 30% to have any chance of retirement at a decent age. Please shed some light on my thinking.

CAN SOMEONE EXPLAIN WHY MY THOUGHTS ON THIS ARE INCORRECT?
I don't like carrying debt either, but... I'm trying to do what gets us ahead the most. Mathematically, funding the 401k makes the most sense. Unless I'm missing something

Why pay high interest first? Because your rate of return by doing so is greater than 11% and it is a guaranteed return. Putting money in a 401k, which is a great thing to do, will probably earn you 4-8% long term. As to the tax reduction due to 401k, it is a tax deferral. You save now and pay taxes in retirement, perhaps at a lower tax rate but no guarantee.

I read your thread and this looks like much more than 'math' question - the real problem is your wife's spending habits and expectations (and therefore it is a problem for both of you). Your desire to put money away in 401k, HSA, etc looks like well justified desire to 'hide' the funds so she can not waste them (vacations , etc).

What you really have to do is sit down with her and talk - having that level of income and having ANY debt if *expletive* stupid. Going on vacations 'earned' while you have debt is stupid, having effectively zero emergency funds when you have that income is stupid. What happens if she now loses her job?

And when it comes to numbers (savings, reductions), it is hard to judge because we are not seeing a complete picture. What is your new income post layoff? how many dependents do you have (if any)? what is your true tax rate? what state are you in? people overestimate their taxes all the time

In terms of savings - you have to list and then have serious conversation on cutting the spending side. credit cards are not the answer, in any form. they are convinient tool that gives you interest free loans and other perks (travel miles ,etc) in hope that you are stupid enough to carry a balance..

"If my wife can't get a vacation each year, it will get ugly and she WILL use the CC to get one."
WTF? HUGE red flag here. do you mean she has impulse control of the five year old?

I think some people are missing the importance of the future "vacation" money. Wife lives on the west coast and her aging family is on the east coast. Likely the kids' grandparents are on the east coast. There is probably no family on her side out west.

Visiting once or twice a year is of primary importance to this family and it is not cheap to get 4 people across the country and back in a plane. I think it is overly harsh to expect these people to give that up. They NEED to do this.

This does not explain the cruise though. I'm hoping the cruise is a leftover item from the "before when we were stupid with our money" phase. If not, there is still a problem that needs to be addressed.

Simplicity is key here. Please focus on the following three items:
1) Pay off your debt. With your income, you can knock this item out in no time.
2) Learn to be discipline in your spending habit
3) Invest

My spouse is also a doctor and breadwinner and we both grew up poor but because of it, we’ve become appreciative of our income and look for ways to retain and build wealth for our future. At the same time, we also know it can be hard to save, especially when your income can afford your many luxuries you never had before. That’s why both of us try to be very mindful in our spending by absolutely not going into debt unless necessary. We only carry a mortgage that I’m trying to pay off as soon as possible (don’t care about saving vs. investing scenarios as peace of mind is more important to us) while fully fund our retirement accounts. Our incomes are less than yours but we’re able to accomplish this by simply being responsible and mindful in our spending habits.

I’m pretty sure that your wife has probably complained of her stressful profession from time to time and she would be correct. So why add more stress to your lives by going into debt? Isn’t it better to save as much as you can while maintaining a healthy lifestyle so that she can retire early? It’s great that you realized that now and trying to figure out how to be better financially but by just paying off debt isn’t going to help you much if you’re going back to the same habits as before when your debt is paid off. Simplicity is key. Good luck!

I think some people are missing the importance of the future "vacation" money. Wife lives on the west coast and her aging family is on the east coast. Likely the kids' grandparents are on the east coast. There is probably no family on her side out west.

Visiting once or twice a year is of primary importance to this family and it is not cheap to get 4 people across the country and back in a plane. I think it is overly harsh to expect these people to give that up. They NEED to do this.

This does not explain the cruise though. I'm hoping the cruise is a leftover item from the "before when we were stupid with our money" phase. If not, there is still a problem that needs to be addressed.

I agree. However, something else needs to cut in order to make it work.

Don't gloss over the suggestion to move closer to family. A Doc living in a LCOL area will still have a relatively high income. Plus, the equity in your house might be able to buy a house outright. It could be a great financial and lifestyle move for you.

You also mentioned about 2 to 3 vacations per year. What is the average cost of those vacations that you want to go? If it is visiting family in the carolinas, how much do you expect to spend on one of those?